Fifth Delay for 340B Final Rule Implementation

On June 1, 2018, the Health Resources and Services Administration (“HRSA”) released a final rule delaying the effective date of implementation and enforcement of the previously issued final rule implementing the 340B Drug Discount Program (“Substantive Final Rule”). The Substantive Final Rule, which was originally published on January 5, 2017, established the methodology for calculating the 340B ceiling price (including the so-called penny pricing policy) and civil monetary penalties (“CMPs”) for knowing and intentional overcharges of 340B covered entities. (See our original post regarding the Substantive Final Rule here.) After repeated delays (see our posts here, here, here, and here), today’s final rule (“”) further delays the effective date until July 1, 2019.

HRSA reiterated the points it has made previously regarding its rationale for delayed implementation. The agency stated that it continues to believe that a delay of the effective date is necessary to provide regulated entities with additional time to implement the requirements of the Substantive Final Rule, and also to provide “a more deliberate process” for HRSA to consider “alternative and supplemental regulatory provisions.” Thus, implementation of the penny pricing policy and CMPs would be “counterproductive” prior to the issuance of additional or alternative rulemaking. A new point raised in this Effective Date Final Rule is that HHS’s efforts to address prescription drug pricing in government programs broadly provides another reason to delay implementation of the Substantive Final Rule. To that point, HRSA stated that the “complexity and changing environment warrants further review of the [Substantive Final Rule] and delaying [it] affords HHS the opportunity to consider alternative and supplemental regulatory provisions and to allow for sufficient time for any additional rulemaking.”

The fact that the effective date of this Obama-era rule has now been delayed five times strongly suggests that the Administration has no intention of implementing it in its current form. We will continue to track and report on further developments regarding implementation of the Substantive Final Rule and other updates concerning the 340B Drug Pricing Program.